Inflation Update: Faster but full-year average within target
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The Gist
A daily dose of market updates and smart investment strategies to guide your portfolio decisions
Today's Report
Your Morning Fix
- The Philippine government’s debt soared to a record PHP 17.56 trillion by July 2025—an 11.9% jump from the previous year—exceeding its projected annual ceiling.
- President Ferdinand Marcos Jr. enacted a new law revamping the tax system for large-scale metallic mining, introducing royalties and profit-based taxes to enhance government earnings and ensure host communities benefit from mining revenues.
- The Philippine peso strengthened to PHP 56.98 against the dollar on Thursday, gaining 32 centavos amid growing expectations of a US Federal Reserve rate cut following disappointing US jobs data.
- Global stock markets, including Wall Street, rose on Thursday while US Treasury yields declined, driven by signs of a softening labor market and Federal Reserve officials hinting at a possible rate cut this month.
- A Reuters survey of economists revealed that China’s new-home prices are now expected to fall by a milder 3.8% in 2025 and dip just 0.5% in 2026, with modest growth projected for 2027, as government policies slow the decline but fail to resolve the ongoing property crisis.
Our Portfolio Recommendation
Our peso portfolio is tilted slightly toward fixed income. While local inflation remains low and monetary easing is likely to continue, yields may be pushed higher by upcoming bond auctions. Continued rate cuts and rising consumer strength are also favorable for local equities, especially real estate and retail. The dollar portfolio is the reverse, with slightly lower fixed income owing to the uncertainty of the effects of tariffs on inflation. US Federal Reserve rate cuts are also closely watched. We remain positive on global equities, with a preference for US sectors, particularly technology, communication services, and financials.
| 2025 Metrobank Forecast | 2026 Metrobank Forecast | 2027 Metrobank Forecast | |
|---|---|---|---|
| GDP | 5.5% | 6.1% | 6.0% |
| Inflation | 2.0% | 3.7% | 3.0% |
| BSP Target Reverse Repurchase Rate | 4.75% | 4.25% | 4.25% |
| Federal Funds Rate | 4.00% | 3.50% | 6.50% |
| USD/PHP | 56.1 | 55.7 | 55.3 |
CHART OF THE DAY
Chart of the Day
Japan real wages rise in July
Real wages in Japan grew 0.5% in July, driven by substantial summertime bonuses and rising base salaries. This increase in inflation-adjusted real wages in July was the first since December. Despite this growth, elevated inflation, which rose by 3.6% in July, remains a concern and continues to strain household consumption. Overall, total nominal pay grew at its fastest in seven months at 4.1% to 419,668 yen. Sources: Bloomberg, Reuters
Featured Reports
More Reads
USD/PHP closes below 57 amid heavy supply
- The USD/PHP exchange rate opened flat at 57.30 on Thursday, with dealer-driven supply leading to an initial grind lower.
- The local pair settled around the 57.18-23 area heading into the afternoon.
- The pair collapsed after a test back above the 57.20 level due to offshore supply coming in heavily later on.
- The USD/PHP exchange rate ultimately closed at 56.98, or 32 centavos lower day-on-day.
- The current support levels of USD/PHP are 56.75/90, while the resistance levels are 57.10/30
READ MORE
Local GS gathers support from global rally and strong peso
- The global bond rally and a strong peso supported the local government securities (GS) market, with benchmarks opening 2 to 3 basis points (bps) lower.
- Buying momentum faded as participants de-risked ahead of key economic data. Trading activity was focused on the 5- to 10-year sector.
- Most bonds still closed 2.5 to 5 bps lower day-on-day, led by Fixed Rate Treasury Note (FXTN) 10-73 at 6.000%.
- Other actively traded benchmarks include Retail Treasury Bond 5-19 at 5.860% and FXTN 10-69 at 5.950%.
- The market awaits today’s local inflation print for August, with Metrobank’s call at 1.3% and a Bloomberg consensus of 1.2%, and the US Nonfarm Payrolls data this evening.
READ MORE
PSEi rebounds amid recovering global markets
- The Philippine Stock Exchange index (PSEi) ended 23.99 points higher at 6,106.92 on Thursday, tracking the rebound in US markets overnight and mostly higher Asian peers.
- All sectors ended positive, with Mining & Oil (+1.08%) and Property (+1.08%) leading the gains, followed by Services (+0.78%), Financials (+0.27%), Holdings Firms (+0.10%), and Industrials (+0.06%).
- Index leaders were ACEN Corp. (+4.59%), Globe Telecom Inc. (+3.68%), Century Pacific Food Inc. (+1.71%), PLDT Inc, (+1.69%), and Ayala Land Inc.
- On the other hand, Universal Robina Corp. (-4.16%), DigiPlus Interactive Corp. (-2.01%), Alliance Global Group Inc. (-1.50%), San Miguel Corp. (-1.34%), and Semirara Mining & Power Corp. (-1.20%) were the index laggards.
- Regional moves remained modest as investors await Friday’s US jobs report, with analysts forecasting 75,000 jobs added in August and an unemployment rate of 4.3%.
READ MORE
USD/PHP closes below 57 amid heavy supply
- The USD/PHP exchange rate opened flat at 57.30 on Thursday, with dealer-driven supply leading to an initial grind lower.
- The local pair settled around the 57.18-23 area heading into the afternoon.
- The pair collapsed after a test back above the 57.20 level due to offshore supply coming in heavily later on.
- The USD/PHP exchange rate ultimately closed at 56.98, or 32 centavos lower day-on-day.
- The current support levels of USD/PHP are 56.75/90, while the resistance levels are 57.10/30
READ MORE
Local GS gathers support from global rally and strong peso
- The global bond rally and a strong peso supported the local government securities (GS) market, with benchmarks opening 2 to 3 basis points (bps) lower.
- Buying momentum faded as participants de-risked ahead of key economic data. Trading activity was focused on the 5- to 10-year sector.
- Most bonds still closed 2.5 to 5 bps lower day-on-day, led by Fixed Rate Treasury Note (FXTN) 10-73 at 6.000%.
- Other actively traded benchmarks include Retail Treasury Bond 5-19 at 5.860% and FXTN 10-69 at 5.950%.
- The market awaits today’s local inflation print for August, with Metrobank’s call at 1.3% and a Bloomberg consensus of 1.2%, and the US Nonfarm Payrolls data this evening.
READ MORE
PSEi rebounds amid recovering global markets
- The Philippine Stock Exchange index (PSEi) ended 23.99 points higher at 6,106.92 on Thursday, tracking the rebound in US markets overnight and mostly higher Asian peers.
- All sectors ended positive, with Mining & Oil (+1.08%) and Property (+1.08%) leading the gains, followed by Services (+0.78%), Financials (+0.27%), Holdings Firms (+0.10%), and Industrials (+0.06%).
- Index leaders were ACEN Corp. (+4.59%), Globe Telecom Inc. (+3.68%), Century Pacific Food Inc. (+1.71%), PLDT Inc, (+1.69%), and Ayala Land Inc.
- On the other hand, Universal Robina Corp. (-4.16%), DigiPlus Interactive Corp. (-2.01%), Alliance Global Group Inc. (-1.50%), San Miguel Corp. (-1.34%), and Semirara Mining & Power Corp. (-1.20%) were the index laggards.
- Regional moves remained modest as investors await Friday’s US jobs report, with analysts forecasting 75,000 jobs added in August and an unemployment rate of 4.3%.
READ MORE